The global ferroalloys market plays a critical role in modern engineering and infrastructure development, with an annual production of more than 50 million tons worldwide. Ferroalloys are master alloys of iron containing one or more non-ferrous metals used as alloying elements in various industries.
Nobel or specialty ferroalloys, though consumed in smaller quantities, are high-valued additives used in the production of specialty steels and super alloys. These alloys find essential applications in high-temperature environments, such as power plants, turbine engines, pollution control equipment, and furnaces, driving accelerated growth in the global ferroalloys market.
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Ferroalloys Industry Growth Tied to Iron and Steel Sector
The growth of the ferroalloys industry is closely linked to the iron and steel sector, which is projected to reach a global production of 2.0 billion tons by 2030, driven by the transformation of Industry 4.0. Steelmaking currently accounts for more than three-fourth of the total demand for ferroalloys. These master alloys are added to steel to enhance its resistance to corrosion and wear while improving tensile strength. Principal ferroalloys such as manganese, chrome, and silicon are widely used across industries. As the steelmaking industry continues to surge, the ferroalloys market is expected to remain on an upward trajectory.
China Leading the Wave of Modernization in the Steel Industry
China, the largest producer of steel, accounts for over 50% of the world's steel production. The country has made massive investments in its steel processing industry, with a focus on infrastructure projects. This growth in infrastructure projects, along with a slowdown in residential construction, has been a key driver behind rising steel consumption. Additionally, China has shown significant progress in ferroalloys production, driven by advanced technologies and innovation. In North America, the region's largest importer of ferroalloys, imports primarily come from South Africa, Georgia, Russia, China, Malaysia, and Australia. While the US steel industry may experience modest growth due to a slowdown in construction and automotive sectors, the ferroalloys market is expected to benefit from this trend.
Energy Costs and Market Balance as Challenges
The production of ferroalloys is energy- and coke-intensive, with manufacturers spending around 40-60% of production costs on energy consumption. Moreover, the production process generates approximately 100 million tons of CO2 emissions, with coke and coal contributing the highest share (50%) of total GHG emissions. High energy costs and energy efficiency concerns pose challenges for ferroalloy production, particularly in countries like India and South Africa, where power tariffs are high. Due to high power consumption, the industry's production utilization rate remains highly volatile.
Trade Tensions and COVID-19 Impact on the Ferroalloys Market
The demand for ferroalloys is closely tied to advancements in the iron and steel industry. However, ongoing trade tensions between the US and China, as well as developments like Brexit and Section 232, are expected to create a bearish sentiment among major steelmakers worldwide in the coming years. Surplus supply has led to a drastic drop in manganese and chromium alloy demand. The modest steel demand and uncertainties in the automotive industry during the COVID-19 crisis have also affected the ferroalloys market.
New Energy Saving Production Technologies to Ensure Sustainability
To address environmental concerns and reduce CO2 emissions, companies in Europe and North America are investing in new technologies that promote energy savings. Manufacturers are focusing on innovation to improve resource efficiency and reduce environmental impact, positioning sustainability as a key trend in the ferroalloys market. Replacing fossil coal with charcoal as the primary energy source and using biomass as fuel are among the approaches considered to meet sustainable climate policies.
Ferroalloys Market Participants Focus on In-house Integrated Production Capabilities and Capacity Expansions
Manufacturers are emphasizing in-house production capacities to secure business against future uncertainties, such as volatile raw material supplies and energy costs. Companies like SAIL in India have prioritized self-reliance in input materials and ferroalloys for better cost efficiency. In the US, AMG Vanadium has broken ground on a second ferroalloy facility in Ohio, aiming to meet the growing demand in the steel and refining industries. The company focuses on creating valuable specialty metals from discarded waste using waste recovery and energy conservation systems. TNC Kaz chrome JSC has also commenced operations at a new smelting furnace as part of a massive modernization project, enhancing productivity and energy efficiency.
